CRABBY: EXCLUSIVE: Senator Heather Gustafson reacts to her anti-fraud bill being gutted

Summary

Garage Logic – CRABBY: EXCLUSIVE: Senator Heather Gustafson Reacts to Her Anti-Fraud Bill Being Gutted
Gamut Podcast Network
Air Date: February 12, 2026

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Episode Overview

This episode of Garage Logic dives into the ongoing Minnesota anti-fraud legislative efforts, focusing specifically on Senator Heather Gustafson’s pivotal bill to establish an independent Office of Inspector General (OIG). The hosts, along with investigative guests, break news about internal resistance to the bill and explore the broader battle over fraud oversight, government transparency, and Medicaid program integrity in Minnesota. Senator Gustafson joins to react directly to revelations that officials may be seeking alternatives to her bill, despite it passing the State Senate with overwhelming bipartisan support.

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Key Discussion Points & Insights

1. The Fraud Problem in Minnesota—Background and COVID-19 Fallout

• Minnesota has a long, bipartisan history of vulnerability to fraud in public programs, especially since the 1970s.
• The situation notably escalated during COVID-19, exposing an estimated $9 billion in fraud as cited by the Minnesota U.S. Attorney’s Office ([01:18]–[03:50]).
• Governor Walz responded by establishing the OIG Coordinating Council (OIGCC): a "dream team" anti-fraud task force comprised of inspector generals from state agencies, the BCA (Bureau of Criminal Apprehension), private auditing firm Waypoint, and Judge Timothy O’Malley ([02:37]–[03:50]).

2. Senator Heather Gustafson’s Anti-Fraud Bill

• Gustafson’s bill would create an independent, statewide OIG, designed to be outside the influence of the executive, legislative, or judicial branches ([04:44]).
• The bill passed the Minnesota Senate with a decisive 60-7 bipartisan vote but stalled in the Minnesota House ([04:49]).
• Notably, twelve other U.S. states have a similar, independent OIG structure.

Quote – Gustafson:
"It's about whether Minnesota wants that independent oversight or not. I mean, 60 senators stood up and said they wanted this... The independence piece makes it so popular because then it doesn't matter which party is in charge." ([06:56])

3. OIGCC Minutes Reveal Internal Resistance

• Podcast host Jay reveals bombshell minutes from a December 2025 OIGCC meeting, where officials wrote:
  "We want to find a workable solution that we can recommend versus the Gustafson bill." ([05:20]–[06:07])
• This vague, pivotal line signals potential plans to either rework, gut, or kill Gustafson’s bill, sparking confusion and concern ([09:01], [10:25]).

Quote – Jay:
"To me, you know what it could mean? It could mean: gut the bill, rework the bill, or try to kill the bill in some way, shape, or form." ([09:55])

4. Senator Gustafson Reacts: Process, Independence, and Exclusion

• Gustafson is openly frustrated and surprised, expressing disappointment that neither she nor other legislative architects have been consulted about alternatives.
• She underscores that the current process should be respected and the Senate-passed bill given a House vote.
• Independence is repeatedly cited as the “key” to effective oversight—ensuring no one party or administration can influence fraud investigations ([08:46]–[12:20]).

Quote – Gustafson:
"We passed as a Senate, an independent inspector general bill with significant bipartisan support. I think that process should be respected and people should allow it to go to the floor." ([07:55])

5. Bill Provisions: Broad Authority vs. Potential Power Struggles

• The bill would grant the inspector general law enforcement powers—arrest, subpoena, and initiate investigations across all state agencies, answering to a bipartisan selection/approval process ([13:19]–[14:29]).
• Guest and attorney Dave Fine Walks points out an exception: the Inspector General would not be able to investigate Medicaid fraud, due to a last-minute amendment ([28:31]).
• This “poison pill” language is controversial, as Medicaid is a core area of fraud risk, and its exemption significantly weakens the bill’s impact ([28:52], [38:13]).

Quote – Dave Fine Walks:
"The way the language in the bill is this one little section. He can't touch Medicaid fraud... This was added at the very end as a floor amendment, and it creates a huge problem in this bill." ([28:50])

6. Competing Interests: Waypoint, BCA, and the Council’s Motives

• Discussion centers on why the Council might be reluctant to embrace Gustafson’s bill:
  • The proposed OIG could eclipse Waypoint’s current anti-fraud contract, threatening job roles and institutional power ([13:51], [25:52]).
  • Some guests speculate it is a classic turf war: "a pissing match" rather than policy-based resistance ([47:04]).
• Underlying concern: current systems may want to maintain the status quo due to hidden interests, opaque practices, or fear of exposing larger fraud ([29:31]–[36:40], [46:03]).

7. Medicaid, Federal Oversight Failures, and Hidden Data

• Minnesota has not reported data to the federal Medicaid Statistical Information System (MSIS) for a decade, yet continues to receive federal funds ([32:50]–[34:22]).
• Managed Care Organizations (MCOs) administer 80% of Medicaid but claim financials and anti-fraud protocols are proprietary "trade secrets," which undermines transparency and oversight ([36:00]–[37:55]).
• The lack of data reporting is identified as a colossal "red blinking light" for fraud, with billions potentially at stake ([36:04], [36:38], [38:13]).

Quote – Dave Fine Walks:
"You cannot make this up. The fraud and detection protocols and policies are proprietary and a trade secret. So... you don't know what they do with the money and you don't know how they try to prevent fraud." ([36:55])

8. The "Nuclear Option" and Repercussions for Providers

• The OIGCC minutes discuss a "nuclear option": suspending direct appropriations to providers as a drastic measure to address fraud ([41:00]–[43:41]).
• This could cut off funding to both legitimate and illegitimate services, creating public backlash and risk deflecting from systemic reforms.

Quote – Dave Fine Walks:
"You cut off the money, they start screaming bloody murder and you go, well, we can't, you know, inflict this kind of harm on these poor people. So I guess we'll just have to walk away from this thing." ([43:41])

9. Historical Perspective: Longstanding Medicaid Manipulation

• Hosts recount prior investigations (2010–2012) revealing that Minnesota overbilled for General Assistance Medical Care (GAMC), prompting federal scrutiny and a $108 million repayment ([51:03]–[52:28]).
• The persistent pattern: layers of “administrative” fixes that ultimately leave room for fraud or allow responsible parties to avoid real reform.

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Notable Quotes & Moments

| Timestamp | Speaker | Quote/Comment | |-----------|---------|---------------------------------------------------------------------------------------------------------------| | 04:44 | Gustafson | "I would say it's the most significant anti-fraud bill that's passed the Minnesota State Senate." | | 06:56 | Gustafson | "What concerns me more is the process... It's about whether Minnesota wants that independent oversight or not."| | 09:01 | Gustafson | "I have not seen any language about any other bill that would be a workable solution versus ours..." | | 14:18 | Gustafson | "Yes, appointed for five years. I think the biggest way to ensure independence..." | | 25:01 | Kenny | "The inspector general may appoint peace officers... establish law enforcement agencies... make statewide arrests." | | 28:50 | Dave Fine Walks | "He can't touch Medicaid fraud... This was added at the very end as a floor amendment, and it creates a huge problem in this bill." | | 36:55 | Dave Fine Walks | "The fraud and detection protocols and policies are proprietary and a trade secret... You cannot make this up." | | 43:41 | Dave Fine Walks | "They're recommending the nuclear option to encourage that kind of, you know, cat screeching response." | | 44:59 | Jay | "The Waypoint person... that's their background is what? White collar criminal defense." | | 46:03 | Kenny | "What's happening with Waypoint and the BCA and them versus the senator? This is why we hate politicians..." | | 54:14 | Dave Fine Walks | "They may have painted themselves into a corner. Remember CMS and Dr. Oz? They said, we're cutting off $2 billion of your money because we don't like the way you're running things." |

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Timestamps for Key Segments

• Background on fraud and OIGCC formation: [01:18]–[03:50]
• Overview of the Gustafson bill and legislative journey: [04:44]–[06:56]
• Discussion of OIGCC meeting minutes and resistance: [05:20]–[10:12]
• Sen. Gustafson on exclusion from council & independence needs: [07:55], [12:20]
• Bill’s powers and bipartisan cooperation: [13:19]–[16:41]
• Governor’s office and BCA statements; legislative process: [17:05]–[19:39]
• Medicaid reporting failures and managed care secrets: [32:50]–[37:55]
• The “nuclear option” to cut provider payments: [41:00]–[43:41]
• Historical Medicaid fraud, congressional hearings: [51:03]–[53:40]
• Optimism—federal action possible at upcoming hearing: [54:09]–[54:48]

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Episode Tone & Takeaways

• The conversation is candid, occasionally sardonic (“this is a bunch of babbling bullshit” – Dave Fine Walks [40:55]), and deeply skeptical of current institutional resistance to reform.
• Senator Gustafson is firm yet diplomatic, focusing on process and the need for independent oversight.
• The hosts and guests blend professional expertise with garage-level common sense, channeling the show's ethos that government should be transparent, accountable, and “run with gumption.”
• The episode breaks news about high-level resistance to anti-fraud reform and provides a peek behind the curtain at the political maneuverings and systemic barriers to truly independent oversight in Minnesota.
• Ending on a sliver of hope, the panel notes that coming federal scrutiny may force the issue, with possible large-scale implications for Minnesota’s Medicaid programs.

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For listeners looking to understand the battle over anti-fraud reform in Minnesota, this episode is a frank, detailed primer on the legislative, bureaucratic, and political forces at play—with context and candor straight from those on the front lines.

Transcript

[Progressive Insurance Announcer]

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[Jay]

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[Kenny]

Go ahead.

[Jay]

And remember, you just hand me any questions you want, Renee, and you can just reach right over in the middle of it.

[Kenny]

Jay, we're on.

[Dave Fine Walks]

Oops, sorry.

[Kenny]

The off air portion of the show has ended. Jay, we're now doing the on air portion of the show. Act like the professional you are. I know you're capable of being a professional.

[Jay]

I never know when we're officially on the air.

[Kenny]

With this, I learned something interesting today. The the fraud in the wheels of fraud actually started in this state in the 70s.

[Jay]

Where'd you find that?

[Kenny]

It was a piece that David Schultz actually wrote.

[Jay]

Of course he did.

[Kenny]

In the Minnesota the Minneapolis Times. And the great thing about David is he dumbs it down for comic book readers like me. So I was able to understand it. And it seemed like it was one bipartisan move after another that led us up to Covid. And then at Covid, everything kind of broke loose. And recently the governor hired a company called Waypoint and they're supposed to investigate and look into the fraud. And they had a meeting in December with the bca. You are the only reporter in town that got a hold of those media those minutes for that meeting.

[Jay]

Correct.

[Kenny]

And that is what has led to our show today.

[Jay]

Yes. So I'm going to try to summarize this for everyone that's listening that might not be familiar with what the oig. What is it called? The oig.

[Kenny]

Office of Inspector General.

[Jay]

No, Office of Inspector General, but this new council coordinated. It's the OIG Coordinating Council.

[Progressive Insurance Announcer]

Okay.

[Jay]

So in late 2025, Governor Walz established this council. And what it is is essentially each state agency has an inspector general. So education's got one, DHS has got one mdh. They all have an inspector general. So this council is made up of all of the state's inspector generals in each agency, each respective agency, and this company called Waypoint, which is a forensic auditing, accounting auditing company. And they also brought in Judge Timothy o', Malley, who also is the former BCA of the superintendent. Former BCA superintendent. Okay, so. And an administrative law judge as well. So think of it this way, Kenny. And to the listeners who might not be familiar with this, this OIG coordinating council is kind of like Governor Walz's dream team. Right. For a better way to put it, like the dream team of anti fraud, including the BCA and Drew Evans, the current superintendent. Their job is to fix this massive problem, which if you listen to the Minnesota U.S. attorney's office, it's at 9 billion and climbing. Right. The fraud.

[Kenny]

Right.

[Jay]

So as you mentioned, these meetings were held. The meeting, the minutes from this meeting is December 18th. And in it there's a lot. But yeah, the thing that jumped out at me, Kenny, and that's why we have State Senator Heather Gustafson, member of the DFL from the Northeast metro. She's joining us because she has a bill that was a major component of the anti fraud legislation last year, and that was the establishment of a statewide OIG independent of the governor, independent of the legislature, independent of the judiciary. Twelve other states do this. And correct me if I'm wrong, Senator Gustafson, I characterize it as a major component of the anti fraud legislation. That's an accurate thing to say, correct?

[Senator Heather Gustafson]

Yes, I would say it's the most significant anti fraud bill that's passed the Minnesota State Senate.

[Jay]

And important to note that Gustafson's bill passed the Senate 60 to 7 and then somehow some way died slowly in the House. But Senator Gustafson is going to bring that bill back this session, which leads me to what I found in these minutes. And I'm going to read it to you on page six of these minutes. All right. This is a pretty big deal, Kenny, and we're going to put it out here first on Crabby, and then it's going to be on 5 Eyewitness News at 6 with reporter, my colleague Renee Cooper. So on page 6 of the minutes it says, quote, senator Gustafson introduced legislation to establish an independent oig, which the Senate recently passed. No actions to be taken at this time from the greater council group. A small working group must be a subset of the larger group, I guess is discussing this topic and addressing the core components displayed on the slides. Now, There is a PowerPoint presentation made along with this along in this meeting. And we've been trying to get the PowerPoint presentation and they haven't given it to us yet. It goes on to say, and this is the very key line quote, we want to find a workable solution that we can recommend versus the Gustafson bill. That's significant. That's why I want to bring in State Senator Heather Gustafson right now to get a reaction to it.

[Kenny]

That's all it says. They don't give a reason why.

[Jay]

No, there's no reason why. We've been trying to find out why.

[Kenny]

And it's worth mentioning before you start speaking, Senator, your bill had very strong bipartisan support in the Senate. And wasn't it the super majority thing that kind of killed it in the House?

[Senator Heather Gustafson]

I'm not sure what happened in the House, but yes, we did get 60 votes in the Senate, which is pretty substantial, especially in the current political climate. So it was, it was popular.

[Jay]

I talked with you about this, Senator, at length on the phone, and you expressed some concern. Can you tell me what those concerns are? Why are you concerned about that particular line from the minutes and what's being discussed about your bill?

[Senator Heather Gustafson]

Well, I mean, first of all, I should say, like I don't take it personally. Right. I mean, what concerns me more is the process. So the legislature passed a bill. It deserves to be debated. We did that in the Senate. It's still alive and now it's in the hands of the House. So we're just asking for it to go to the floor and get a vote and then to, you know, when says the Gustafson bill. So when the notes refer to the Gustafson bill, it's also important to remember that this isn't just about one legislator. It's not just about me. It's about whether Minnesota wants that independent oversight or not. I mean, 60 senators stood for, stood up and said that they wanted this over the other options that were presented. And I really think it's the independence piece that that makes it so popular because then it doesn't matter which party is in charge. It doesn't matter who the governor is. It's an independent oversight authority.

[Jay]

You had expressed concern that they had not yet talked to you about any of this. Do you still hold that same concern?

[Senator Heather Gustafson]

I mean, of course I would like to be more included in this. You know, I do feel that there should be some legislative representation on this committee, I think, or this council. I think we worked really hard you know, across party lines. We put in a lot of time and effort on this, and it's a good bill. It's well drafted. It fills a gap that's clearly there in some of our fraud prevention. And it's popular. It's popular not with just the legislature either, but we know it's popular in our communities as well. And again, it's that independence thing. So it's not so much me. I'm a big girl. I don't take it personally. But we passed as a Senate, an independent inspector general bill with significant bipartisan support. And I think that process should be respected and I think people should allow it to go to the floor.

[Jay]

In the House when it says workable solution that we can recommend versus the Gustafson bill, that sounds like something other than your bill.

[Senator Heather Gustafson]

Well, I have not seen any language about any other bill that would be a workable solution versus ours, so I don't know what that means either. I, you know, I have as much to detail on this as you do. I would hope that it isn't a deterrent from our bill going to the floor and getting the vote it deserves, but I don't, I don't know what it means. And I can only hope that the legislative process isn't interfered with.

[Kenny]

I can jump to conclusions. I jumped to a conclusion as soon as I read this piece, and that was that Waypoint or BCA doesn't want to compete against the inspector, the proposed inspector general.

[Jay]

Jay, you think that's it could be. Again, you know, we're trying to, we.

[Progressive Insurance Announcer]

Don'T know, but trying to read the.

[Jay]

Tea leaves because nobody's given us any answers as to what it means.

[Kenny]

Right.

[Jay]

It could mean that. It could mean a number of, to me, you know what it could mean. It could mean gut the bill, rework the bill, or try to kill the bill in some way, shape or form. Right. Those are usually the options. That's what you usually see. And when, Senator, when you see versus the bill, what do you.

[Senator Heather Gustafson]

Yeah, I don't know what versus the bill means either. You know, I think there's a lot that could be interpreted there.

[Jay]

Let me interrupt you there. Are you concerned it means replace the Gustafson bill?

[Senator Heather Gustafson]

You know, I'd like to give people the benefit of the doubt, but it is it. I do have a lot of questions. You know, I, I saw this at the same time. Other people did, too. I wish that there would have been some communication with the bill authors to let us know what's, you know, what, what's happening again. I, I have to remind several people of this, but we are our own branch of the process too. Right. And that should be respected. We passed a very popular, broad bipartisan bill that went through several drafts, lots of vetting, several committee stops, and then passed on the floor overwhelmingly in the Senate. So now what we're asking for is for it to get a vote on the House floor this session and you know, let's let people vote. Let people vote on a bill that we know is popular, that we know will work, that we know it's not going to, you know, there isn't one piece of fraud legislation that's going to solve all of our problems. Right. Fraud is a nuanced problem. It can be very complicated. But this is one of those things that people understand. It's something that's missing in the current process. And again, I sound like a broken record, but you cannot stress how important it is to have that independence. That's really the key. That's why it is a unique statewide oig. And you mentioned at the top of the show There are internal OIGs at some of the departments and that's fine, that's good. Oversight is good, especially when we're trying to protect our tax dollars. But an independent oversight author authority that looks at, you know, that has jurisdiction over all of it. Right. And can work in multiple agencies and can be addressing problems that one agency might not even know is happening in another one. That's really the key. And then to make it as non political as possible is also just a key component to that independence piece.

[Jay]

What was your first thought when you read that line?

[Senator Heather Gustafson]

I mean, I was curious about why that bill was specifically called out. I mean, I was curious. It's just the name of the committee in general or the council in general. OIGCC sounds very much like what we were trying to accomplish. So, you know, I have, I have questions too that go. That have not been answered. We'll continue to try to reach out and see if we can find out what some of these workable solutions look like. And I, you know, that being said, I'm sure there are lots of people on that council that are, well meaning that are trying to accomplish the same things that our bill and the legislature are also trying to accomplish. So I don't want it to come across that it's us versus them. I just am also curious and have questions about why our bill, my bill in particular, was called out several times in this memo.

[Kenny]

Well, I'm, I'm reading, looking at the Bill. Right now, Senator, and I'm at the part where it's line 627, relationship to Powers and duties of other agencies. And it basically lists what the duties would be of the inspector general. And just as a voting citizen, I love everything I'm reading. I mean, and I'm wondering, does Waypoint have the same powers that would be assigned to this inspector general?

[Senator Heather Gustafson]

Yeah. I mean, Kenny, it's a fair question. I don't know the answer to that. Again, I'm not in these meetings. And the only notes I've seen are the ones that you have that were made public.

[Dave Fine Walks]

Yeah.

[Kenny]

The inspector general would be a part of the executive branch and not. He doesn't have to answer to either party. Nonpartisan role and I believe. Appointed for five years.

[Senator Heather Gustafson]

Yes, appointed for five years. I think the biggest way to ensure independence, because I think people, some, you know, if anybody just heard that and they heard executive branch, they might be wondering about the independence of it.

[Jay]

But.

[Kenny]

Right.

[Senator Heather Gustafson]

It's a bipartisan selection committee. They put forward a list of names that have been vetted. Of course, there'd be public hearings and so. And all of the names that would be submitted would be, you know, from a bipartisan vote. And then it has to have confirmation by a super majority in the Senate or majority in the Senate. They can also only be removed by a majority in the Senate. So it, you know, and of course, a governor has the option of not going with one of the. One of the people on the list. They don't have to, but would be harder to get that majority vote than in the Senate.

[Jay]

Right.

[Kenny]

Jay, Let me just read the first couple of lines. The inspector general. Now, this is the House, the Senate bill. Excuse me. The inspector general has the authority to investigate fraud and misuse of public funds across all programs administered by state agency. The inspector general may perform the inspector general's duties and apply the inspector general's authority without obtaining approval from another agency. And it goes on and on. And as far as I can tell, my. My uninformed opinion is it's all good. I don't see any troubles with it.

[Jay]

I bet you agree with that, huh, Senator?

[Senator Heather Gustafson]

I was going to say, yeah, yeah, me neither, Kenny. Well, I mean, we worked really hard. Yeah. To make sure that this was, you know, we really did have a bipartisan cooperation on this. I mean, yes, it's my bill and I made the ultimate decisions, but we had Republicans in the Senate and the House who were working alongside with us. This was not a. It's probably everything that you would hope government to be right. We had bicameral, bipartisan meetings weekly where we all went over language together and decided on what we could get done. And, you know, more of that. Right, More of that, please. And so when we did it, for something that is as significant as this, it's. It's frustrating to not have more support around it. But I'm, you know, I.

[Jay]

We'll see.

[Senator Heather Gustafson]

I'm pretty tough. I work pretty hard. We'll see what we can do.

[Jay]

We got another session. It's.

[Dave Fine Walks]

It's.

[Jay]

Is it already in the hopper? Do you have to bring it back differently because it was in. How does it work when it comes back from that last session? Is it already in there?

[Senator Heather Gustafson]

Yeah. So it's still alive because it's a biennium, you know, so it's. It's alive and it passed the Senate.

[Jay]

Yeah.

[Senator Heather Gustafson]

So, you know, I'm still taking meetings on it, but truly this is in the hands of the.

[Jay]

Yeah, yeah. Because it's already passed the Senate. So it's just the House.

[Senator Heather Gustafson]

Right. Yeah.

[Jay]

We. As I mentioned, I was working with Renee Cooper, my colleague at Channel 5, on this, and they're gonna air something tonight as well. So she and I came up with questions for the governor's office as well as the bca. Senator, I think I wanna read these to you. At least they gave us some response. They didn't give us an interview, but they gave us a response. So this is from a spokesperson in the governor's office. This is an important issue and a complex effort. The council was created to improve the state's efforts to combat fraud and think about ways to implement anti fraud efforts. They wouldn't be doing their job if they weren't thinking critically about how to make anti fraud efforts as effective as they can be. The administration has always been supportive of a statewide oig. So there they are saying the spokesperson saying the governor still supports the statewide oig, doesn't say he supports the bill, but still supports a statewide oig. Didn't really answer some of the other questions we had, but I want your reaction to that. What's your reaction?

[Senator Heather Gustafson]

I mean, again, that's the first I've heard that, so I think that's wonderful. I'm glad it's in a statement that we can refer back to when we're trying to get this to go to the floor. It's important to know exactly where they stand on a statewide oig. And then the question, of course, becomes, you know, a council is great as far as a move to make during the interim when we're not in session. But I think there is a solid and well crafted bill on the floor or that passed the Senate and is ready to go to the House floor. And that's what I'll be fighting for in this next session.

[Jay]

So we also reached out to the bca. The BCA hosted this council meeting and it's important to point out the BCA with now Judge o' Malley involved as the Director of Office of Compliance. He's part of this. He was in this meeting as well. So we asked the BCA as well, Senator, could they explain what that line meant about your bill? And this is a response again coming from a spokesperson at the bca. Early versions of legislation often require additional discussions to ensure that the most effective language results. In this case, the OIGCC is another voice and the ongoing conversation. The OIGCC is a venue for ideas where everyone is committed to fighting fraud. Again, didn't answer a lot of our specific questions, but they did respond. Early versions of legislation often require additional discussions. What are your thought on that? Would you characterize this as early version?

[Senator Heather Gustafson]

No. I mean, I flagged that too when I heard it. It's not early versions. I mean, early versions were, you know, last January, a year ago. But we've now passed it again. I think it went through 11 versions, 10 engrossments, multiple committee stops and you know, every. All public. Right. So every change was made public in committee. The drafts are all available online. It went through multiple changes, multiple meetings with stakeholders, Countless meetings with stakeholders. So yeah, it's not in early stages, but I didn't hear a no. So I'm going to hold out for a yes. But again, I'm in the legislative branch, so everybody in the executive branch, they are welcome to come up with fraud solutions. I think we are at a point where all ideas are welcome. But I'm just going to continue with my process because I believe that what we've worked on is good. I think it's bipartisan. I think it's got the support necessary to pass. And really at this point, isn't that what Minnesotans want?

[Kenny]

Yeah, as soon as possible. Yeah, absolutely. And right away, you know, yesterday.

[Jay]

Do you think there should be a legislative liaison with the Council of some sort?

[Senator Heather Gustafson]

I do, but that's their prerogative. But I mean, it is important. Again, I would just stress that if this is something that they want to do, they can, you know, when we're writing bills, we don't have a liaison from the governor's office. So maybe I don't know if that is a logical inference or suggestion, but for somebody who's been working on this for over two years, I would like to know what the workable solution is that they're focusing on.

[Jay]

And we've been asking, just so you know, Senator, we've asked the governor's office and the BCA multiple times. Can they explain that line versus the Gustafson Bell? Right. And we, as you can see in the statements, they have not given us a specific answer as to what that means other than all things are on the table and all things should be discussed. Does that line, with no explanation as to what it might mean, the full context of it? Is that the kind of thing, after you work on legislation for two years, get it past the Senate almost to the finish line with the governor saying he's going to sign it? Does that language give you a little bit of pause? I mean, does it worry you a little bit that there might be something major that could happen to the bill?

[Senator Heather Gustafson]

I mean, yes, again, I'm not taking it personally, but what I do take it as is them working against a solution of a bill that got 60 votes in the Senate. So, and, and maybe I should rephrase that. I don't know that they're working against it.

[Jay]

Right.

[Senator Heather Gustafson]

But the versus the Gustafson bill sort of leads you down that road. I just know that I'm going to keep doing what I've been doing. You know, we got opposition letters from, you know, multiple people at different stages, but they were more for people who were wanted the status quo to continue. And I think there's overwhelming support that that's not working.

[Kenny]

Right.

[Senator Heather Gustafson]

So we'll just keep doing what we're doing. Again, we have a solid bill and we just need it to get to the House floor so it gets the vote. It's, it deserves one last question. Whether it passes or not. I think it will pass, but it should get to the House for a vote.

[Jay]

One last question. We'll let you go. It doesn't sound like you've been invited to any future meetings, right?

[Senator Heather Gustafson]

Probably not.

[Jay]

Okay, so you haven't been invited. Let's establish that. How do you feel about not being invited to future meetings where they might be discussing your bill and would you like to be invited to those meetings if they're discussing your bill?

[Senator Heather Gustafson]

You know, at this point, we're going to stick with what we've passed. We already know it's successful. That's how it got passed. So I've got good relationships with people in the legislature. We're just going to do our job and we hope that people allow us to do our job well.

[Jay]

Hey, thanks. You spent more time than I thought we would with you. You've been real candid. Thanks for talking to us. We really appreciate it. You know, it's nice of you to come on and talk to us because that's a pretty big deal coming out in those minutes and we appreciate you addressing it. Thanks. You know.

[Senator Heather Gustafson]

Yeah, thank you, guys. I appreciate the time.

[Jay]

Yeah, we'll talk to you soon. Okay.

[Senator Heather Gustafson]

Okay.

[Kenny]

We'll take a short break and we'll be right back.

[Jay]

Yeah.

[Progressive Insurance Announcer]

This episode is brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game? Well, with the name your price tool from Progressive, you can find options that fit your budget and potentially lower your bills. Try [e-mail], progressive Casualty Insurance Company and affiliates. Price and coverage match limited by state law. Not available in all states. This episode is brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game? Well, with a name your price tool from Progressive, you can find options that fit your budget and potentially lower your bills. Try [e-mail] Progressive Casualty Insurance Company and affiliates. Price and coverage match limited by state law. Not available in all states.

[Kenny]

Gee, let me read from Heather's.

[Jay]

Yeah.

[Kenny]

Excuse me. The senators Bill Senate File 8, 5 6, and I really love this part. The inspector general may appoint peace officers as defined in section blah blah blah and establish law enforcement agencies known as the office of Inspector General, Anti Fraud and Waste Bureau to conduct statewide investigations and to make statewide arrests. The primary jurisdiction of the agency is limited to offenses, offenses involving fraud, abuse and any other criminal conduct within the jurisdiction of the Office of the Inspector General. I thought that was really interesting and I'm wondering if that might in part be what Waypoint thinks their toes are getting stepped on.

[Jay]

It could be. It's. You know, it's interesting that you zeroed in on that, Kenny, because that is really important to note. You touched on something really important.

[Kenny]

I mean, he's got a lot of power, the inspector general.

[Jay]

And what people don't understand, this is a major bill for anti fraud. And you're right. I'm very glad you picked up on that because that law enforcement authority is huge.

[Kenny]

Very much so.

[Jay]

Not only ability to make arrests, but also subpoena people. Right. This OIG would be able to subpoena people, would be able to arrest people, would be able to issue warrants. I mean, this.

[Dave Fine Walks]

But not if it's Medicaid fraud.

[Jay]

Not if it's Medicaid fraud. We'll get to that, Dave. Of course, Dave's chomping at the bit over here, but here's what's interesting about that, Dave. You have to admit that's I think, part of the reason why it came out of the Senate 60 to 7. It was pretty strong. And 12 other states have done it and apparently done it well. And it's a major. So to have it show up in these minutes, Dave AS versus the Gustafson bill. And joining us, by the way, is Dave Fine walks. We got us finished spelling his name up there, guys. Fine Walks W A C H S should be in the text I sent you.

[Kenny]

Should be Fine Walks with a big damn stick.

[Jay]

And for those who don't know, Dave and I go back to 2012 working on, well, 2010, working on stories.

[Kenny]

Yeah.

[Jay]

And Dave's the former lead attorney for the Minnesota Hospital association, has also been a citizen lobbyist and you've been with some nonprofits as a lobbyist up at the Capitol on all things healthcare. Dave understands this stuff inside and out as an attorney. So with that said, Dave, to Kenny's point, and I'm so glad he picked up on that, I failed to mention it. Broad sweeping powers for this OIG to arrest warrants, subpoenas, the whole nine yards. And doesn't have to answer necessarily to the governor, the legislature or the judicial branch to technically. Yeah. What do you got?

[Dave Fine Walks]

We still have to work on my name.

[Jay]

Oh, fine.

[Dave Fine Walks]

Achs.

[Jay]

Achs. It should be in my text to you. Yes. Which is severely misspelled, but thanks. I got it, Jay. I got it. Oh, did I misspell it in the text?

[Dave Fine Walks]

Yes.

[Jay]

Could have been voice text. My bad. That's all me.

[Dave Fine Walks]

And that's it. All my friends at the health plan spell it. Fine Wacko.

[Jay]

Yeah.

[Kenny]

David, I think we're just going to put you on the payroll and make you a permanent co host.

[Dave Fine Walks]

There you go.

[Jay]

Now we got the name right.

[Dave Fine Walks]

We're good.

[Jay]

So anywho, to Kenny's point, it's significant in that it's got broad powers, right?

[Dave Fine Walks]

Yes, it's significant that it has broad powers, which could be the death knell for what's going on here.

[Jay]

Yeah. And you did mention as you were chomping at the bit to get in. All those powers exist except for Medicaid fraud. He would not be able to do what he. He can do it for any other fraud but Medicaid fraud. Is that because it's A federal program or the way the language is the bill.

[Dave Fine Walks]

The way the language in the bill is this one little section. He can't touch Medicaid fraud.

[Jay]

Okay.

[Dave Fine Walks]

Why that is, I don't believe there's anything that requires that, but it's in the bill. This was added to the bill at the very end as a floor amendment, and we're trying to excavate who put that on there, but it went on at the last minute and it creates a huge problem in this bill.

[Jay]

The. What we were talking about with Senator Gustafson was her bill, the OIG bill, but also this really interesting piece of language from the governor's dream team of anti fraud busters saying they want to do something versus the Gustafson bill. You've been up at the Capitol a long time, lead attorney for the Minnesota Hospital Association. How do you read that line?

[Dave Fine Walks]

I read that we want something instead of, you know, we want to come up with a proposal that isn't this proposal, man. You know, I have my own theory as to why, but they clearly wanted. And they want something else.

[Jay]

Well, you can. On this podcast, you can give your theory.

[Dave Fine Walks]

Well, here's my theory. This bill which establishes an independent inspector general, okay? With. With these broad powers, once you establish that if there's problems and somebody says, well, we've just noticed he can't do Medicaid fraud, or she can't do Medicaid fraud, you can fix that. But if you eliminate this and set up something else that's basically safe and ineffective, now, you're good, you haven't solved the problem, but you've done your job and you can walk away and sleep easy.

[Jay]

So do you think this council, this council set up by the governor, you think that might be the reason they want to get rid of Gustafson's bill?

[Dave Fine Walks]

I'm a little concerned about the council set up by the governor to start with. So if I may, as a taxpayer and a citizen, let me say a couple of things. Number one, Mr. O' Malley is the Director of Program Integrity.

[Jay]

Right. The Office of Program Integrity, which is under the BCA, by the way.

[Dave Fine Walks]

Well, actually, it's supposed to be. Mr. O' Malley is an employee of Waypoint. It has been revealed by KSDP and perhaps others. Okay. If he's an employee of Waypoint, who calls the shots, his boss or him? And who is his boss? And how does that work in terms of maintaining program integrity?

[Jay]

Good question.

[Dave Fine Walks]

And how much is he being paid? Because inquiries were made and Waypoint takes the position that we're a private company and what we pay our employees is not public information. So right out of the gate I'm a little short of these warm, fuzzy program integrity feelings that we're supposed to have. So I have a problem there. You know, number one, who's calling the shots? In addition to that, there's other issues with this, like what are they actually going to do? I mean, I read the stuff and it sounds fine, but if you want to talk program integrity, the most important, by the way, and the federal government has a function of program integrity, the same exact words, you know what makes that program integrity function work? Something called the transformed MSIS system, which stands for Medicaid Statistical Information. This is a reporting requirement where all states are supposed to report data into this federal data repository. And it's used to discover fraud, to look for suspicious trends and basically keep the program integrity at the highest functioning level and look to see what's working. You know, it's basically an audit function. This thing went into effect. All states were supposed to start reporting data in 2016. It's now 2026 and there's been none. You know how much data Minnesota has reported? Zero. None, nada, zip, nothing.

[Jay]

So how do you track the fraud with no reporting?

[Dave Fine Walks]

You can't. And that's why there's no reporting. Now here's the other thing. All the other states are reporting data. It's just Minnesota, California and Oklahoma. And Oklahoma's got an excuse. They're new to managed care, so they don't have enough data to dump in. But Minnesota and California don't report anything. Now here's another fun filled factoid. The penalty for not reporting is you get your federal money cut off. Minnesota should have had its federal money cut off years ago, but that hasn't happened. Although there's a hearing coming up in the spring where that may happen.

[Jay]

Yeah, they've started threatening that.

[Dave Fine Walks]

So you look at what Waypoint has said they're going to do. Okay, and I did this. Here's what waypoint's going to do. They're going to develop consistent investigative reporting policies across state agencies because consistency is the steady diet of fools. Okay, so it's going to be the same across everybody. All right, that's great. They're going to set up a fraud prevention program that can be implemented across state agencies. Whatever it is, every agency can do it. It's going to be consistent, formalized data sharing among state agencies in alignment with federal and state law to quickly identify those committing fraud across multiple state programs. Well, what about finding out why we've never reported anything into the federal database ever.

[Jay]

How does that happen, Dave? How is it that Minnesota hasn't reported and nothing really has been said or done about it that I know of?

[Dave Fine Walks]

Well, I'll give you one.

[Jay]

I mean, I'll give you a little.

[Dave Fine Walks]

Factoid which might address that question.

[Jay]

Yeah.

[Dave Fine Walks]

The Minnesota Department of Human services looks over 1.3 million people and they have 7,100 employees doing it. All of CMS. And the federal government, the whole federal agency has 6,300 people to take care of all 50 states and 150 million people.

[Jay]

So therefore, not enough to be able to do anything.

[Dave Fine Walks]

Not enough. It just slips under the radar. But it's a huge defect. Yeah, no, enormous.

[Progressive Insurance Announcer]

Well, let me.

[Jay]

Oh, you got more there? Because I. Cause I want to get back to these minutes.

[Dave Fine Walks]

There's one more. And they're going to, you know, specialized skills to audit and investigate. All that's fine. But here's my two questions. Why aren't they looking into why Minnesota doesn't report the mandatory reports every month at a federal database? That to me is just an enormous red blinking light. Well, no, it's a fair question is why aren't they talking about that? What we're doing in Minnesota. We hired Optum to look at 20% of the Medicaid program, the fee for service program, but not the other 80%. Why are we looking at the 20% where there's no fraud? You know, it's like looking for a bacon cheeseburger in a kosher deli. You're not gonna find it. Unless, of course, it was your intent in the first place to not find it.

[Jay]

It would be a good place to look. It's again, another fair question that we don't have the answer to.

[Dave Fine Walks]

Those two questions are the most important question.

[Kenny]

Can speculate what the answer may be. Go ahead. Go ahead and speculate.

[Dave Fine Walks]

Yeah, I'd be happy to speculate. If this data was reported, it would be the end of the scam that Minnesota has been running for 20 years. This would be the death that we're doing this. And by the way, here's another reason we don't report the data. Here's how it works in Minnesota. What happens to the money that we give, the 80% that we give to these managed care organizations, these health plans. Right. What they do with the money, they claim is a secret. Trade secret protection. Under Minnesota law, it's a secret. They can't.

[Kenny]

What the hell?

[Dave Fine Walks]

Exactly.

[Progressive Insurance Announcer]

Yeah.

[Jay]

That's when I did stories with when I did stories, Kenny, with Dave back in 2010, 11 and 12 that led to congressional hearings about this. That was the line given to us, that it was because they were a private company, we didn't get to know that and know it was taxpayer money.

[Dave Fine Walks]

And hell is not the last word in that acronym. You know, you guys are using the acronym. So what they do with the money is a secret. But it gets better. They're in charge of investigating fraud. All the fraud related to this 80% has been outsourced to them. So let's ask the question, what are you doing? Well, guess what? That's a secret too. Our fraud prevention and detect. I'm not making this up. You cannot make this up. The fraud and detection protocols and policies are proprietary and a trade secret. So you now have a double edged problem. You don't know what they do with the money and you don't know how they try to prevent fraud. But here's the way to deal with that. Let's hire a company to look at everything but them.

[Jay]

Interesting. Well, there's even.

[Kenny]

Let me read, I want to read that. I found it in the bill. Exception for federal funding. The inspector general must not comply with any provision under this section if compliance with the provision would prevent the state from receiving federal financial participation for the medical assistance program or result in a lower level of coverage or reduced access to coverage for medical assistant enrollees.

[Jay]

There you go. Now that's the paragraph, that's the graph. Yeah.

[Dave Fine Walks]

And if you'd, you know, indulge me, let me tell you what I think that means as a lobbyist with 40 plus years experience. The first part's easy. If you're going to investigate something that's going to mess up our receiving federal matching funds, you can't do it. End of story. Done. The second part's more interesting. Reduce coverage or access. See a lot of what we do in Minnesota, Medicaid doesn't pay for it. We bill Medicaid, we bill the feds anyway and don't tell them and then use that money to provide extra services. And a lot of these services just aren't really that necessary as evidenced by the current disaster in these 14, what they call high risk program. High risk is a fancy word for stupid and useless.

[Kenny]

Right.

[Dave Fine Walks]

You know, so this just says you can't investigate Medicaid fraud if we lose federal money and you can't investigate whether we're billing the federal government for stuff the federal government shouldn't pay for in the first place. This is a poison pill.

[Kenny]

Tell me who's receiving this money? Is it places that care for adults that can't care for themselves or what are we talking about here?

[Dave Fine Walks]

In theory, some of it. Some of it. Everybody can receive some of this money. But you know, let me give you a couple little examples, all right? Non emergency medical transportation. I want you to think about that for a minute. Non emergency. Now, in my world, we used to call that taxi cabs. Now we call it Uber. Okay, Right, Yeah, we pay for that. I don't think the federal government has that built into their program set. I mean, I could be wrong. You know, there's a whole bunch of services. Services, they're a little bit. Housing stabilization. That's under. That was under our Medicaid program, the goofiest program ever designed by the mind of man. You know, you can't investigate that because if you investigate that, the feds might cut off our money.

[Jay]

When I interviewed Joe Thompson, who was the lead and fraud investigator with the US Attorney's office here, he said to me, when the housing stabilization stuff you're talking about came down, can he get a load of this? He told me, he told me whatever the dollar amount was, 100 and some odd million, it had grown to. He looked right at me and he said, 90% of that is fraud. And my jaw dropped. I said 90. He goes, at first glance, it's at least 90%. It was almost entire, almost entirely fraud. The whole program.

[Kenny]

David, what was the quote you gave us last time in Minnesota? Fraud is a buyer's market or something like that.

[Dave Fine Walks]

That was actually Professor Schultz, I believe.

[Kenny]

Oh, did. David said that.

[Jay]

David said buyer's market.

[Dave Fine Walks]

My quote was, this is a bunch of babbling bullshit.

[Kenny]

That gets right to the point.

[Jay]

Gets right to the point. Well, there's something else in those minutes before we lose time here that really jumped out to me. All right, and this is again under the heading, and we're talking about this OIG coordinating council set up by the governor, I call it his anti fraud dream team, if you will. Right. To prosecute all this and get rid of it. But it says strategic options remain on how we should approach fighting fraud and our appropriations, meaning the money spent and sent to the organizations that provide the services to low income people. Right. And in it it says here's an option and it's quote, nuclear option, which means you're going to go nuclear, you're going to blow the whole thing up kind of thing. Nuclear option, eliminate direct appropriat. All right, Continue working to improve the process at the End of that paragraph, it says, our recommendation is take the nuclear option. So they're recommending now, it's not formalized, but David, this is huge. They're saying this council is saying, the Governor's Council on Fighting Fraud is saying right now we're recommending in the early stages a nuclear option to eliminate direct appropriations to the suppliers, to those who supply the services. To me, that seems huge. What's your reaction to that and what does it mean?

[Dave Fine Walks]

Well, here's my reaction to that. I mean, it's a strategic approach to divert attention away from a problem. Think about what Governor Walsh did when the investigation started this and everything started piling up. What did he do? He shut down these programs. He shut down the high risk programs, right?

[Jay]

The high risk ones, right, yeah.

[Dave Fine Walks]

Now here's what you. Why do you do that one? It diffuses the heat immediately. Cuz you can't keep running if everybody's looking into them and want to investigate him. So you take the nuclear option, you cut off the money. Now what happens? Pick up this morning's Star Tribune. There's an article in there, some poor home care providers. I'm gonna lose my business. I haven't been paid. This is a disaster. It's terrible. And it is terrible because there's honest people who are providing needed services that are trying to make a living. And we need to balance that. But think about it strategically. You cut off the money, they start screaming bloody murder and you go, well, we can't, you know, inflict this kind of harm on these poor people. So I guess we'll just have to walk away from this thing.

[Jay]

But if they're recommending, cutting out, we're talking about.

[Dave Fine Walks]

They're recommending the nuclear option to encourage that kind of, you know, cat screeching response.

[Jay]

Because we're talking hundreds of millions of dollars that they're saying to cut it.

[Dave Fine Walks]

Off, they need that to divert it. Because I'll tell you something else that's in those minutes.

[Jay]

Yeah.

[Dave Fine Walks]

There's a line item in there that deals with. In Minnesota, we pay our organizations, the MCOs. The state charges a 5 or 10% fee to dish out money.

[Jay]

And MCOs are the managed care.

[Dave Fine Walks]

Yep.

[Jay]

Yeah.

[Dave Fine Walks]

Now I want you to think about that. If you're getting 5 or 10% to dish out money, what do you care where it goes? The more money you dish out, the bigger your vig is, the bigger that dollar volume. And that 5 or 10% is. There's stuff in those minutes that says we gotta keep that. Cause there's Legislators that wanna eliminate. They're going, why are we charging money to hand out money?

[Jay]

Which would make sense.

[Dave Fine Walks]

What sense? Okay. And why is this group fighting to meet that. The other thing. Returning briefly to Waypoint, the members of this committee are meeting individually with another Waypoint employee. They're having individual meetings. That employee's skill and expertise is white collar criminal defense. Wonder what they're talking about.

[Jay]

Wait, the. Wait, the Waypoint person. That's their background is what?

[Dave Fine Walks]

White collar criminal defense.

[Jay]

Defense, yeah, that's. Why would they have. I mean, I guess there's some expertise about what charges would. Look, I don't know. Why would that be, you think? I have no clue. I have no clue.

[Dave Fine Walks]

I think that that's an important question to ask.

[Jay]

Yeah. Why we ain't getting any answers lately? You notice that?

[Dave Fine Walks]

Why are they meeting one at a time? And when you look at this person's LinkedIn, he's only got one skill set listed. White collar criminal defense.

[Jay]

Wow. I don't know.

[Dave Fine Walks]

I don't get it.

[Jay]

Wow. Well, as you saw Kenny. I was talking to Kenny about this the last couple of days, trying to bring him up to speed because I was doing a lot of it with you and Renee, and Kenny was asking great questions like any person would. The normal questions that every person has on their mind. And I kept saying to Kenny, I don't know, man. I don't have the answer. We're trying to get the answers. And we're asking the questions of the governor and the bca. And so far, two days later, we really. You notice in their statements, we never. Kenny got a direct answer. We really didn't.

[Kenny]

What's happening with Waypoint and the BCA and them versus the senator? This is why we hate politicians. This is why we hate you. This. I mean, this is it right here. This is ground zero. We hate you for these reasons. When a bipartisan bill comes up that everybody agrees on and it kind of got. It got stuffed in the House due to technical reasons.

[Jay]

Yeah, whatever.

[Kenny]

And then Waypoint comes in and says, yeah, we can do it better. It looks like a power struggle to me. Well, jealousy and power. And it's all. And this is why we hate you. And this is why we think we'll never have an answer to the fraud. Nobody. You know what I'm saying?

[Jay]

Yeah, good point, Kenny.

[Kenny]

I mean, we're so frustrated because. So frustrated.

[Jay]

What would be the. You know, this is where you and I just get to speculate. Right. What would be the reason that Drew Evans at the BCA or Waypoint. Well, more specifically, Waypoint. Why would they. Why would they not like Gustafson's bill? What's the problem?

[Kenny]

I mean, when you ask somebody like me, and if they're not going to tell us why. It's a pissing match. That's all it is. Mine is bigger than yours. And I, you know, it's one of those kind of.

[Dave Fine Walks]

And I'll give you my point of view on this thing. First of all, Gustafson's bill with what I call a poison pill language is not really that useful now because we've eliminated the big things, the Medicaid stuff, right? And we know from our experience last year that we're talking about redundant jurisdiction. This OIG is not gonna replace the DHS oig. It's in addition to, on top of.

[Jay]

And not only that. In addition to and on top of. And all those important things we talked about. Subpoena, power, warrants, arrests.

[Dave Fine Walks]

I mean, so here's the deal. So here's the Gustafson bill, even though it's significantly hobbled by this language, but remember, it only takes a one line legislative amendment. Lines 8.12 to 8.15 are hereby deleted. And now they've got a big problem.

[Kenny]

So you know the lines.

[Jay]

He knows.

[Kenny]

I'll check him. It's 8.12 to 8.15.

[Jay]

That's a former attorney, the lead attorney for the Minnesota Hospital Association.

[Dave Fine Walks]

All right? It comes from years of writing that on a napkin saying, give this to the committee chair, the stories I've worked.

[Jay]

On with him in the past. He'll be on the phones quoting all these legislative codes, statutory codes, and Kenny, I'll have to stop him in the middle of phone call and go, dave, I have no idea what those codes are.

[Kenny]

Where are you?

[Jay]

What the hell do they just say? I don't know. And every time I look it up. You're right, he's spot on. He almost knows them verbatim.

[Dave Fine Walks]

Yeah, but that's the thing. The stuff we're talking about here is, at the end of the day, unlawful. And conspiring to do this in an organized framework is unlawful.

[Jay]

Now, when we say unlawful, though, shouldn't we clarify. That'd be administrative. It wouldn't be criminal, would it? You're talking civil administrative law.

[Dave Fine Walks]

That depends on how you cast the.

[Jay]

Conduct, I guess, out of the gate. Unless something.

[Dave Fine Walks]

Let me give you the classic lawyer answer. That depends.

[Jay]

That depends, right?

[Kenny]

That's the question all the laymen are asking me. Who's profiting here? Why the delay? Why the dragging the feed? Who's scared to be found out? You know, that's the question we're all asking sitting at the bar.

[Jay]

You're right.

[Dave Fine Walks]

Let's a little spec. Let's speculate a little more.

[Jay]

I mean we don't know. We are speculating.

[Dave Fine Walks]

We are speculating. What if for low these many years Minnesota's budget is being propped up by some extra federal money that's coming in that we're wrongfully billing the feds for for whatever reason. And what if that money totals in the billions of dollars? And if that money stops coming in, we got a Giganto problem, you know, but we got a Giganto problem anyway because it does look like we're not doing this. Honestly.

[Kenny]

Who in the federal government is responsible for pulling the plug on that or letting it continue?

[Dave Fine Walks]

CMS has the authority to do this.

[Jay]

Center for Medicaid and Medicare Services.

[Dave Fine Walks]

Cms. And of course the President with his executive order powers could easily do the thing that most. What most needs to be done here is Minnesota's so called 1115 waivers need to be pulled. If those waivers were pulled, we go back to the way the program was additionally designed. The money flows into Minnesota, you gotta show the feds receipts. Everybody can see what's going on. It's honest. That's the way fee for service works. You know the part that Optum's investigating. There's no fraud there because that's the way that runs. If the whole program ran that way, there'd be no fraud.

[Jay]

I mean Kenny, Dave and I started working on a series of investigative reports in 2010 on the state. Dave, help me out. The state was. Were they over billing? They were somehow taking. What was it again? They were getting 50% more than they should be.

[Dave Fine Walks]

We just. Your memory's good Jay. Thanks for bringing it up. Okay, this is where we just.

[Jay]

This is 2010 by the way.

[Dave Fine Walks]

This is what we came in and what we just talked about. Minnesota used to have a program called General Assistance Medical Care. Gamc. Not the car company, but gamc, Right. It was a form of assistance for people who were younger and working and didn't qualify for medical assistance. Now the federal government never paid for that. They still don't pay for that. What Jay and I started working on back in 2010 and 2011 is it turns out that Minnesota was using a funny little insurance reserve adjustment to bill the federal government for a big part of the cost of GAMC to subsidize it with federal money. That was against the law. You can't do that.

[Jay]

So in other words, the HMOs were billing them for something that didn't exist, Right?

[Dave Fine Walks]

Yeah, they were billing for insurance reserves here in Minnesota. It was just a scam.

[Jay]

And so it led to congressional hearings. What was the date of the congressional hearing?

[Dave Fine Walks]

April 25, 2012.

[Jay]

So Dave had to testify. The head of DHS had to testify. They didn't ask me to testify, but they did reference our stories. Absolutely. And in the end, Kenny, it was about six months later, I wanna say five months later, Governor Dayton announced that the HMOs that we were talking about, the four HMOs, and that congressional hearing, they had to give back, I want to say, $103 million to the state of Minnesota. 103 million?

[Dave Fine Walks]

108.

[Jay]

But who's 108 million? I'm sorry, 108 million.

[Dave Fine Walks]

Which, by the way, represented 10% of what they had gotten made away with.

[Jay]

10%? Correct. It was a fraction of what they made away with.

[Kenny]

Fraud runs the state. We are run by fraud.

[Jay]

Think about that, kenny. That was four HMOs making gobs of money. In fact, one of my stories I focused on, and One of the CEOs of those HMOs, Kenny, when they were taking this $108 million that wasn't theirs, she was making gobs of money. She had a Montana ranch home up in the mountains. She was driving a Bentley. And this was a nonprofit hmo. Nonprofit. That was part of my series of stories that led to the congressional hearings. So the reason we bring this 2010 stuff up, Kenny, is it's. That's how far back this goes. We start working on it in 2010.

[Dave Fine Walks]

Not only that, but the language about if it would lower services that would otherwise be available, that language is exactly this. We were providing services at the expense of the federal government that the federal government doesn't pay for. That's so the argument that. How dare you. We would never do that. Bullshit. You were doing it in 2010. And 11 we caught you, you had to give back the money.

[Jay]

I felt pretty good about that. Having a stab series of stories that led to money being given back to taxpayers. I felt pretty good about that.

[Kenny]

I don't remember never receiving any money. To be honest. I can't tell you what I was doing in 2010.

[Jay]

Yeah, you didn't give me money back, but you didn't get it.

[Kenny]

No. Yeah. I don't know what I was doing then, but I know I was broke. You gotta give me something. Give Me? Something to hang my head. Something optimistic. One thing.

[Dave Fine Walks]

Well, no, I'm gonna give you something optimistic.

[Jay]

There you go. I'll let Dave do that.

[Dave Fine Walks]

They may have painted themselves into a corner. Remember CMS and Dr. Oz? We just talked about this a little over a week ago, maybe two weeks ago.

[Jay]

Yeah, we did.

[Dave Fine Walks]

They said, we're cutting off $2 billion of your money because we don't like the way you're running things.

[Jay]

Well, he threatened to do that?

[Dave Fine Walks]

Well, no, he said we're doing it. But Walsh demanded his right to a hearing.

[Jay]

Correct?

[Dave Fine Walks]

There's gonna be a hearing. Maybe in April. Maybe. You know, it's coming up.

[Jay]

We gotta have you back on when that hearing goes up.

[Dave Fine Walks]

Well, it's my intention. I'm gonna. I hope to work on an amicus brief for that hearing because, as you may, I've got some things to say.

[Jay]

Yeah, but the positivity is what?

[Dave Fine Walks]

You know, the hearing could result not only in the 2 billion being cut off. The hearing could result in more than that. If the federal government becomes aware of what we are talking about here today, together. The educational value of what we are exploring is enormous. If the feds look into this, that hearing could turn into an unmitigated disaster for the Walsh administration and all the people running these scams. And that would be wonderful.

[Kenny]

He'll be long gone by then, though.

[Jay]

No, not necessarily. Spring.

[Progressive Insurance Announcer]

April.

[Dave Fine Walks]

No.

[Kenny]

I'm thinking the way they. The way they stretch everything out.

[Dave Fine Walks]

Oh, it's possible. You know, it's possible he could be out of office. But, you know, I would begin researching statute of limitations, not end the terms.

[Jay]

That's good stuff, Dave. Thanks.

[Dave Fine Walks]

You bet.

[Jay]

Yeah, good stuff. We had a good show today, Kenny. We broke some news.

[Kenny]

I need a hot shower and an aggressive nap.

[Jay]

Hey, we went in the weeds a little bit, but they were important weeds to go into, and they heard it first on Krabby.

[Kenny]

Thank you very much, Jay. Thank you, David. And thanks to the senator. And thanks for listening to and watching news from the Crabby Coffee Shop.

[Jay]

Yeah, we'll be back. See you, Ken.